I am the president, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute, a San Francisco-based think tank.
I regularly address national and international audiences on healthcare issues. My written works have appeared in top newspapers throughout the country, and I've been interviewed on CNN, FOX News, MSNBC, and many other prominent outlets.
As a native Canadian and naturalized American, I have a unique understanding of how government-run single-payer healthcare systems actually operate -- and why such ideas are wrong for America.
I have published four books: in 2004 titled, Miracle Cure: How to Solve America’s Health Care Crisis and Why Canada Isn’t the Answer (2004), The Top Ten Myths of American Health Care: A Citizen’s Guide (2008), and The Truth About Obamacare (2010), and my latest, The Pipes Plan: The Top Ten Ways to Dismantle and Replace Obamacare (Regnery 2012).

How High Deductible Plans Lead To Low Healthcare Spending

The Centers for Medicare and Medicaid Services (CMS) just released their latest estimates of national healthcare spending over the past few years — and they seem to provide some rare good news. Researchers determined that total U.S. health costs increased 3.8 percent in 2009 and 3.9 percent in 2010 — the slowest annual growth rates in 50 years.

President Obama and his allies have been quick to take credit for the slowdown. As a recent, not-so-objective piece in the New York Times put it, the moderation in health cost growth was “happening just as the new health care law was coming into force.” Healthcare economist and former Obama adviser David Cutler told the paper of record, “The recession just doesn’t account for the numbers we’re seeing. I think there’s much more going on.”

There’s much more going on, alright. But Obamacare has nothing to do with it. Healthcare costs started to plateau well before Obamacare began taking effect. And the trend closely tracked the spread of consumer-directed health plans — high-deductible, patient-centric coverage options that give people control over their healthcare dollars and provide a direct financial incentive to conserve care and spend responsibly.

According to CMS’s own data, the growth rate of health costs didn’t start moderating in recent years — it’s been cooling off since 2002.

It’s no coincidence that 2002 was also the year that employers started embracing high-deductible health insurance plans for their workforces. The plans really took off in the mid-2000s. Between 2006 and 2011, the share of American workers enrolled in one more than quadrupled, from 3 percent to 13 percent.

As of January 2011, the most recent month for which data exist, 11.4 million Americans were enrolled in consumer-directed health coverage — a 14 percent increase over the 2010 total.

High-deductible plans give patients financial responsibility for routine medical services. The plans are coupled with Health Savings Accounts (HSA), which allow people to save pre-tax income to be spent exclusively on health care. The insurance policies kick in once the annual deductible is reached, to protect patients against health catastrophes.

Together, high-deductible plans and HSAs give patients the incentive to use some common sense when shopping for health care. Any money they don’t spend they keep and can be rolled over to the next year tax free. That encourages patients to be aware of the prices they’re charged — and to avoid consuming excessive or duplicative services.

Work from the RAND Corporation finds that the average American worker who switches from a traditional health plan to a consumer-directed one uses 14 percent fewer medical services — without any associated adverse effects on health outcomes.

Expanding the use of consumer-directed plans would dramatically reduce national health spending. RAND researchers have estimated that expanding the share of employers with such plans to 50 percent would reduce national health costs by a stunning $57 billion per year.

The philosophy embodied in consumer-driven plans is at odds with Obamacare. The president and his allies don’t believe individual Americans should be trusted with their own healthcare dollars. They want bureaucrats making the decisions. That antipathy is reflected in their health law.

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